Dollar losing reserve status at ‘stunning’ pace – Eurizon CEO — RT Business News
The sanctions on Russia are a driving force behind the ongoing de-dollarization, Stephen Jen has said
Western sanctions against Russia have accelerated the move away from the US dollar worldwide, Stephen Jen, the CEO of London-based asset management company Eurizon, warned on Tuesday.
The dollar’s share in global reserves fell ten times faster last year than over the past two decades, Jen said, as cited by Bloomberg. The process began as some countries started to look for alternatives after seeing Russia’s assets frozen abroad and the country cut off from the global financial messaging system known as SWIFT, according to Jen.
Adjusting for “wild” exchange rate fluctuations last year, the dollar has lost roughly 11% of its market share since 2016 and double that amount since 2008, Jen and his Eurizon colleague Joana Freire wrote in a note.
“The dollar suffered a stunning collapse in 2022 in its market share as a reserve currency, presumably due to its muscular use of sanctions,” the note reads. “Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies, Jen and Freire explained.
The greenback now represents about 58% of total global reserves, down from 73% in 2001 when it was the “indisputable hegemonic reserve,” the experts said.
China and India are working to use their own currencies to settle international trade, while Russia started to accept payments for its exports from a number of countries in rubles and Chinese yuan.
Earlier this week, Brazilian President Luiz Inacio Lula da Silva called on developing nations to move away from the US dollar in favor of their own currencies.
Following Lula’s comments, US Secretary of the Treasury Janet Yellen admitted that the role of the dollar as the world reserve currency could diminish due to Washington using its leverage over the global financial system to pursue its geopolitical goals through sanctions.
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